Fortinet
FTNT
announced that it intends to implement its previously disclosed five-for-one forward stock split on Jun 22. This is the second time that the Unified Threat Management network security solutions provider will be splitting its common stock since 2011. The company has authorized a share buyback of approximately $830 million at the end of the last reported quarter.
The annual meeting to procure stockholder approval for the filing of the Amended and Restated Certificate of Incorporation that includes the stock split proposal will be held on Jun 17. If approved, each Fortinet shareholder will receive four additional shares for every share held. The approval would lessen the stock cost from about $300 a share to about $60 a share.
The planned stock split will make the company’s stock more affordable to employees and retail investors, thus boosting demand for Fortinet’s shares. This, in turn, should push share prices up further.
Fortinet’s shares have returned a whopping 710% in the past five years, significantly outperforming the Zacks
Security
industry’s five-year growth of 184.5%.
The company’s efforts to boost shareholder value are noteworthy. A solid balance sheet and robust cash flow generating capabilities help Fortinet in boosting shareholders’ wealth. As of Mar 31, 2022, the company’s cash and cash equivalents and short-term investments amounted to $2.11 billion, up from $1.32 billion as of Dec 31, 2021. Increased net cash balance and no short-term debt obligations remain positives.
Fortinet boasts a sturdy cash-flow generating ability bolstering the company’s liquidity position. It generated $396.1 million of cash from operations in first-quarter 2022. Its free cash flow balance at the end of March was $273.5 million.
Alphabet
GOOGL
, one of the Big Five American IT companies and one of the most valuable brands in the world, had announced a 20-for-one common stock split in February this year to reduce its share price from about $2,700 per share to about $150 per share.
Through this split, Alphabet aims to enter into the Dow Jones Industrial Average, a 30-company index of stocks that tends to exclude high-priced securities.
This was followed by another American Big Five company and e-commerce giant
Amazon
AMZN
, which declared a similar stock split of 20-for-one in March this year. Amazon split its common stock after more than two decades with an aim to earn a spot in the Dow Jones Industrial Average.
In July 2021, the graphic processing unit (“GPU”) inventor,
NVIDIA Corporation
NVDA
, had split the common stock in four-for-one, making it affordable for small investors. The split had increased the number of authorized shares of NVIDIA to four billion.
Currently, Fortinet, Alphabet and NVIDIA carry a Zacks Rank #3 (Hold), while Amazon carries a Zacks Rank of 5 (Strong Sell).
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Shares of FTNT and NVDA climbed 32.6% and 3.6%, respectively, in the past year. Shares of GOOGL and AMZN declined 5.6% and 30.6%, respectively, during the same time frame.
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